Busy start to the year for residential and commercial property markets

Property

Activity is already heating up at residential property auctions and there's plenty of activity on the commercial property front too

27th Jan 21, 9:49am by Greg Ninness

Sales activity is already firing up again in both the residential and commercial property markets, which look set to continue from where they left off last year.

Barfoot & Thompson, Auckland's largest real estate agency, kicked things off with 14 early residential auctions over the week from 9-15 January and achieved a 100% sales rate.

That was followed with auctions for 69 residential properties the following week, (16-22 January) with an overall sales rate of 75%. Only one of the properties that sold went for less than its rating valuation.

Things also got off to a cracking start in the Bay of Plenty last week where Eves Real Estate took 21 properties to auction and the sales rate was 86%. Details of those individual properties and the results achieved are available on our Residential Auction Results page.

Things have also been busy on the commercial property front with Bayleys Real Estate reporting a slew of recent sales in Auckland and Christchurch.

The Auckland properties were all smaller commercial units of a type that would appeal to private investors, with prices ranging from $680,000 to $1.23 million.

Net rental yields on the properties that were tenanted were all within a tight band of 5.25% to 5.5%.

Sales from Bayleys' Christchurch office were more of a mix, with prices ranging from $446,600 to $5.6 million and the net yields were in the 6.52% to 10.07% range.

Details of the individual properties and other recent commercial sales are available on our Commercial Property Sales page.

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29 Comments

by tothepoint | 27th Jan 21, 10:00am 1611694833

Why are we all not surprised?

TTP

by mikekirk29 | 27th Jan 21, 10:04am 1611695049

Rodney listings up 5% on figure from 1.1.21.
Auckland up 17%
By the way getting excited about things selling well over CV when CV was set 4 years ago, is a bit dated.
Market listings generally start accelerating January 17th or so. It is now 27th and much of Hibiscus Coast has not yet awoken from its slumber.
Apartment sales up 7% in 2020 in auckland compared to 2020.
Lifestyle blocks up 54%. Space.
Went to Wairu Road for a rug yesterday. Shops there with 50% off sales.
One we bought our last couch from is closing down to go online.
Commercial sign of times.

by tothepoint | 27th Jan 21, 2:17pm 1611710267

I know that in provincial growth centres - such as Palmerston North - property developers are making direct approaches to the owners of subdivisible land....... There’s a huge demand for new-build premium houses in sought-after, established locations - but virtually no building sites available.

Clearly, local authorities need to get off their chuffs - and make land available for residential development.....

Or is a bit of commonsense too much to ask for?

TTP

by karl seastrand | 27th Jan 21, 10:34am 1611696859

TTP... looked at buying residential land here in New Plymouth but it seems there is still plenty available to build on which has made me far less keen.

by tothepoint | 27th Jan 21, 11:44am 1611701056

New Plymouth?

Is that in Taranaki - a bit north of Hawera?

TTP

by karl seastrand | 27th Jan 21, 5:28pm 1611721688

yes

by Flying high | 27th Jan 21, 12:10pm 1611702656

Being "less keen" I have to wonder whats your true objective Karl. Also very representative ... when plenty is available buyers wait, until theres a lack and prices are shooting up, then the scramble is on.

by tothepoint | 27th Jan 21, 12:22pm 1611703377

Agree with you, Flying high.......

New Plymouth might be one of the last cabs off the rank - but when it does move, it might well play the rapid catch-up game.

TTP

by Flying high | 27th Jan 21, 12:27pm 1611703652

A bit like our vaccine program eh ttp Ethiopia will get their vaccines before us

by PocketAces | 27th Jan 21, 1:23pm 1611706995

Perhaps they NEED them more than we do

by Carlos67 | 27th Jan 21, 3:44pm 1611715451

New Plymouth is still as cheap as chips, try driving across the other side to the East Coast where Tauranga house prices are twice the price.

by karl seastrand | 27th Jan 21, 5:41pm 1611722501

Carlos67...yeah you certainly get a lot of house here for your money compared to Tauranga or the big cities and cost of living is lower too. Without checking I would guess NP is about average price for a medium sized NZ city. Really glad there was no reason for me to have to buy and live in Auckland again.

by karl seastrand | 27th Jan 21, 5:31pm 1611721876

TTP...according to One Roof the place I bought in NP last April has gone up $1000+ a day so not lagging in terms of house price increase. But with lots of empty residential land available I'm unsure whether it would be a good investment. Just looking for sensible way to diversify a little more.

by RickStrauss | 27th Jan 21, 1:06pm 1611705981

Is this Tim Mordaunt, property broker in Palmerston North, spruiking property in Palmerston North here in these comments?

by Flying high | 27th Jan 21, 1:30pm 1611707457

Is that you Melania? Much to your disgust, properties are almost selling themselves and for biggie money not just in Auckland

by RickStrauss | 27th Jan 21, 3:25pm 1611714310

That means my property wealth is also growing, true.

Although yes, I'm a bit disgusted at the sheer parasitic approach we currently take to the wealth of younger generations of Kiwis.

by Flying high | 27th Jan 21, 4:10pm 1611717054

I agree but why worry... the govt will not change anything until they believe it will effect their popularity. Miss ardern blathers on about climate crises and the young people and some old ones lap it up.

by RickStrauss | 27th Jan 21, 4:39pm 1611718747

Why worry?

I guess I'm an old school Burkean conservative, where I believe it matters very much what sort of society we hand on to following generations. I'm certainly not going to celebrate our policy-driven wealth transfers from younger working Kiwis to older asset holders.

by Bugger | 27th Jan 21, 10:20am 1611696017

Yes, true. Virtual business is the trend, storage facilities and courier companies are a spinoff. If you buy a commercial property, make sure it has the flexibility to be converted or rebuilt as residential. So zoning is key, tricky to find.

by tim52 | 27th Jan 21, 1:18pm 1611706713

I tried to go shopping in the Tauranga CBD on Sunday and non only was the shop I wanted to visit not open but about half (generously rounded up) the commercial properties were vacant (this is long term trend getting worse). We also have a reasonable sized industrial office space across the road from my work vacant for at least a year. We have a recently had a new shopping centre and industrial zone developed for the region so this may be a factor but still.

What are the other cities commercial property markets like? I would think most of this activity was forced sales looking looking at Tauranga.

by Carlos67 | 27th Jan 21, 3:49pm 1611715757

The Tauranga CBD has been dying for a while, covid just made it appear worse. Plenty of new malls like the crossing with easier parking. People don't want to travel. Couldn't be bothered going to the mount the other day, bought the shoes online and had them delivered to the door with free delivery.

by CWBW | 27th Jan 21, 1:32pm 1611707563

More money has been lost waiting for a crash than a crash itself. Since 1992, there's only 1 long term price direction of the housing market. Those who do not learn from history are destined to repeat it.

Folks who had waited for a house price correction since 2012 had lost $395K of pure gains in the form of opportunity costs based on the country average. That's $395K these people could have had in your account right now if they didn't subscribe to property bears and doomsday prophets. If you consider rental yields, thoughtful portfolio management, niche buying and location banking, that amount easily more than doubled.

I see NZ becoming like Switzerland and other mature countries where 56.6% are happy renters and 43.4% happy landlords (2015) and staying that way permanently. When that eventuates, owning a house as part of the Kiwi dream will be just that, a dream- and you have to be asleep to believe in that.

It's not too late right now. Be quick before the market matures and opportunities are gone forever. Which side of the fence people choose today in the housing market will be where they are for their lifetime- unless you strike a lotto of course.

Stop subscribing to bears and doomsday prophets, they make their money from YouTube and enjoy their egos stoked by popularity votes. They had caused tremendous financial damage to their followers ever since they became popular.

Don't wait too long, the train ain't waiting for you- it will sad to miss it and be stranded for life.

by printer8 | 27th Jan 21, 2:46pm 1611711974

CWBW
You are sadly correct.
I note that many - such as Retired Poppy - who advocated waiting for the bottom of the market have since long disappeared.
The key consideration for FHB regarding buying a house or property should be that it is about buying a home to live in. In particular they really need to consider what a “home” is - it has tremendous security and intrinsic value which one can not put a dollar value on.
Anticipating the market should definitely not be the key consideration. One buys a home for the very long term (allowing that one will trade up over time) and that short term (three to seven years) fluctuations in the market are not of great importance. Whatever the house’s changing value, it is still a home, not a commodity or an investment that is going to be sold in boom times.
While the first consideration is that it is a home, the secondary consideration is not the market but relates to servicing the mortgage. One needs to be prudent and ensure that one can meet mortgage obligations due to unexpected or negative events. These may be financial (such as relating to interest rates) but more importantly personal factors such as job loss, significant health issues and In particular relationship breakdowns. Far, far more homes have to be sold since the Great Depression due to relationship breakdowns than bank forced mortgagee sales due to rising interest rates or corrections in the market. Even when interest rates went to 20% I don’t recall substantial numbers of mortgagee sales.
Those who try to time the market are playing a risky game; yes, a possibility of a cheaper home but also the risk of a far more expensive home. As said, those who buy on a market high have little to fear provided they can service the mortgage as over time property prices are likely to bounce back. I have posted previously that I purchased an in investment property in 2006 and saw during the GFC the RV go 10% below the purchase price . . . but same rent came in and significant capital gain when I did sell in 2016.
As for trying to time the bottom of the market, the events of the past 12 months clearly illustrate that it is so difficult to determine. Covid and it’s economic consequences were the most high risk factors that could have led to a correction over many decades. Even the RBNZ and bank economists with all their experiences and ability to influence the market considered a correction of around 10% - they were wrong. I won’t call them all-knowing muppets, but finding it difficult to come up with a synonym, on this site were with glee calling up to a 50% correction. I recall Foreign Buyer - another no longer about - posting at the time “Anyone considering buying is officially stoopied (sic)”. The moral; even RBNZ and banks cannot predict the housing market trend with certainty so don’t believe that you can - and long term it isn’t important and personal factors rather than the housing market and interest rates are.
Over the past decade, it’s been really tough for FHB - for those who have waited for the market bottoming have found it even tougher than it need have been for them. For those who purchased two or three years ago - well they have been advantaged by a double whammy of increasing housing market and falling interest rates.

by tothepoint | 27th Jan 21, 3:14pm 1611713659

Best post I’ve read here for a long time.

Well done, printer8, for sound advice that’s easy to understand.

TTP

by Spectators | 27th Jan 21, 3:47pm 1611715659

I agree w/ your observation re the last decade. If you could have bought then should have. However I don't buy your implication that the current situation is the same so get in now or be left behind. Plot NZ interest rates vs NZ house prices over the last decade and you don't have to be a statistician to note that the relationship is significant. If a sucker is able to borrow more than you did to buy your house then prices go up. So are we looking at further interest rate cuts (negative rates) between 2020-2030? The swap curve has steepened so best guess is no and if anything rates should be higher in 5yr-10yrs. So not likely a sucker able to borrow more than you did for your house so what will happen to prices?

by Carlos67 | 27th Jan 21, 3:57pm 1611716239

I think a few people need to get over the mental hurdles and move on. You cannot simply "Wait" forever to get into the property market, life moves on and it moves faster and faster the older you get. Yes chasing property price increases suck if your a FHB but it is what it is and if you watch the overseas news, life in NZ is a paradise compared to many other countries.

by Pusheen | 29th Jan 21, 1:37am 1611837439

Fully agreed, hence my advices are the same to those younger trained professionals.. head to OZ, more $, more bench mark standard (such as for surgery, oncology), more affordability (outside MelB & Syd), more savings security, cheap grocery, remember all the NZ banks & payment for the groceries.. were owned by OZ anyway - NZ is paradise 'at a cost', no wonder more Kiwis moves across to add for larger populations as compare to few OZ.. eg. crims settled back to NZ. Really sux to be a Kiwis from Healthcare point of view, have to jump across.. just for 'procedure'. Handled by Kiwi but in OZ.

by dago | 28th Jan 21, 8:07am 1611774456

A small few investors will beat the rush by offloading properties through a private market of buyers connected to their RE agent, without listing the properties on TM

by Carlos67 | 29th Jan 21, 11:21am 1611872513

True I was shown a few properties "Not yet listed" by agents over a year ago now. Something about these that put me off buying them however. I guess the RE wants to try and create the illusion of the property somehow being "Exclusive" and it doesn't need to be listed or that you can get in before anyone else sees it or something.